tv BBC Business Live BBC News September 19, 2017 8:30am-9:01am BST
this is business live from bbc news, with ben thompson and sally bundock. toys aren't us any more. the american toy store files for bankruptcy protection amid mounting debt problems. live from london, that's our top story on tuesday the 19th of september. running one of the biggest toy shops chain in the world is not child's play. toys‘r‘us struggles to compete with the likes of amazon, so will it be able to re—invent itself? we talk you through what's at stake. also in the programme.... china looks to open up it's $40 trillion financial sector to foreign money — but is this an exciting opportunity or exposing foreign investors to high—risk wild west—style
trading? and market watchers are focused on washington, where the federal reserve begins its two—day meeting later. and from royalty to rockstars, we'll be getting the inside track from the boss of one of britian‘s oldestjewellers, who sell cuff links, watches and rings to the rich and famous. and as toyrus calls in the administrators — we want to know, is it another victim of online shopping, and will you miss it on the high street? let us know, use the hashtag, bbc bizlive. hello, and welcome to business live. toy‘r‘us is probably the best—known specialist toy store in the world. but the us giant has filed for bankruptcy protection because of growing debts, at least partly caused by big changes in the way we all shop. it's not yet clear what it means for the chain's future. the company, which has built up more
than $1 billionn of debt at its 885 stores in the united states, suffer with more people look to shop online at the likes of amazon or buy toys from supermarkets. there are more than 800 other shops in 38 other countries around countries around the world, which toy‘r‘us says will continue to trade as normal. of course, that does include the shops in the uk. some of the biggest countries for the company are south africa, china, japan and here in the uk. growing losses have sent the firm to bankruptcy protection. their latest results showed a $161; million loss in the three in the three months to april, and they havent made
a profit since 2013. andrew walker is our economics correspondent. andrew, you have got the findings there. as sally was highlighting, this is just affecting the us and canada at the moment, and the operations in europe and asia are quite separate. it is worth saying that in terms of operations, the company says the stores will remain open and continued selling to consumers. this is very much an attempt at setting the business on a sustainable basis for the future. there's no indication in the statement of any plans to close stores or losejobs, i statement of any plans to close stores or lose jobs, i suppose that's always conceivable. but fundamentally what this is always about is doing with the debt problems that sally mentioned. they have $5 billion worth of long—term debt. that can of course be sustainable, but when you are actually losing money, it's a lot more difficult. there are two side spin the problem. the debt that was a result of the buyout by private
equity 12 years ago. and the continuing competition. there are in mind, even without the debt, the company would be having at least some difficulty. if you look at the most some difficulty. if you look at the m ost rece nt some difficulty. if you look at the most recent results they produced, they lost $54 billion. in operating terms, that means it is before you start to count for the debt interest. there is very much a two sided problem. how familiar a tale is it that private equity gets involved, they load up a firm with debt, and then we sort of see this familiar walk away? i debt, and then we sort of see this familiarwalk away? i mean, it's been repeated in the past. it's a lwa ys been repeated in the past. it's always the criticism of private equity that they go in and shut so like sell—off so will sell offshore and make the money. it is certainly the case that the debt came following the buyout by private equity 12 years ago. it is certainly also the case that now one of the reasons that the company has some problems is because of that debt. you know, there are occasions when private equity buyouts can generate
a very successful business. but clearly that particular model of a debt—financed beaut does create risks. and those risks have been particularly acute in an environment where there were other types of challenge to the business. the rise of long—time retailing has been a particular problem for toys'r'us, and formerly of a conventional retailers. they do have an online presence, is not as if they ignore this issue. but the fact of having this issue. but the fact of having this bricks and mortar presence does mean that there is a particular kind of cost base that has to be dealt with, and it has been reflected in these difficulties. interesting times. thank you, andrew. i know you will keep up—to—date with stuff as it develops. let's take a look at some of the other stories making the news... the european union is spearheading an effort to limit the global trade of torture instruments and tools used to carry out executions. almost 60 countries have committed to join the alliance for torture—free trade, which formally launched at the united nations on monday. countries with some of the highest numbers of executions, including china and the us, are not participating. and we have an update on that story
we we re and we have an update on that story we were covering yesterday. a burst fuel pipeline in new zealand has led to the cancellation of 28 flights and cut off supplies of petrol used by high—performance cars. the damage has caused widespread disruption to flights ahead of saturday's general election. an investigation has found that the leak was caused by a digger which scratched the affected pipeline. and speaking of pipes... a case involving bank notes and a toilet has swiss investigators scratching their heads. the geneva prosecutors 0ffice confirmed that tens of thousands of euros — in 500 euro bills — were found cut up in toilet pipes in a local branch of ubs, and three nearby restaurants. the high—value euro notes are due to be taken out of circulation next year over concerns they facilitate illegal activities. probably quite legitimate concerns!
that is our toilet story, we have had the toy story, and now some may argue we're going to discuss the wild west! that's how some described the financial system in china, but that's obviously not everybody‘s opinion. let's discuss china... china is the world's second biggest economy, behind only the united states. it could become number one in the next decade. but currently, large chunks of the chinese economy are off limits to foreigners because of restrictions over what they're allowed to own. but the chinese government is looking at how it can attract more investment from overseas, and today, china's central bank meets to discuss way to open up the economy. that meeting of the people's bank of china is looking at the financial services industry, which at around $40 trillion is one of the most valuable sectors of the economy for companies both inside and outside of china. un figures suggest over the last few
years there's been a trend of growing foreign direct investment in china, despite it falling to $133] billion in china, despite it falling to $133.7 billion last year. whilst the finance industry is still subject to restrictions many parts of the chinese economy are open to foreign trade with little regulation — particularly in the 11 trial free trade zones dotted around the country. and some of the areas where china's government wants more investment from abroad include electric vehicle manufacturing, ship design, aircraft maintenance and the railways. miranda carr is a strategist at haitong securities. nice to see you. sally ran through some of the issues, this meeting is designed to open up the economy, but you could say it is one thing having the desire or wish to do it, and
very different putting the practical realities in place. how likely is it that china will open up to foreign investment? china has been trying to open up to foreign investment for a number of years. it has been trying to attract equity into the stock markets and bond investment into the treasury is. also its corporate bond market. but that has been just impressed by investment flows. this is allowing financial institutions to control and on the banking system 01’ to control and on the banking system or the insurance companies, and also allow things like the international rating agencies into the country, so actually allowing some of the western financial system into china, rather than just the capital. and is there it desire, a desire from overseas organisations, to get involved in china ? overseas organisations, to get involved in china? i imagine it is a huge potential market. very definitely. this is one of the frustrations. the banks have had to have 25% stakes, rather than wholly—owned operations. you have
had fund managers, they'vejust wholly—owned operations. you have had fund managers, they've just been allowed to have 100%. yes, there is allowed to have 100%. yes, there is a huge interest in getting into the country. however, you know, it's not like it's going to be an amazing opportunity necessarily, because china will still control all of the different bits of the market, so it's not going to be if referral, like we saw when the us banks came over here in the 1980s —— it is not going to be a free for all. who will be attracted to this? the major investment banks will want to go in. a lot of the fund managers, like fidelity, schroders, aberdeen asset management, they are trying to set up management, they are trying to set up 100% owned entities. you see fund managers and insurance companies trying to offer, you know, that is a case of bringing the international clients with them into dinah, but also trying to serve the chinese customers as well. it's quite an opportunity. but is... you are up against quite stiff competition and you are still in a state controlled market. it's one to watch. thanks,
miranda,. in line from the eu chamber of commerce in china related to this, saying that european companies are suffering from what they call promise fatigue over china's failure to follow through on pledges to open up its market. it seems that many firms are wanting to get in there, but actually doing so, doing so like suffering from promise fatigue. i've ever heard that phrase before, promise fatigue! theresa may is trying to break the blog and brexit negotiations. 0ne is trying to break the blog and brexit negotiations. one of india's biggest companies has told the bbc it will remain invested in the uk no matter what. he highlighted the problems businesses are facing about not knowing what is going to happen. there's a lot of noise around brexit. there's a lot of concern. and some of those are genuine concerns. largely coming off the uncertainty of the magnitude of what form brexit will take, the timing, so on and so forth. the delays that are coming
when there is uncertainty, people put business plans on hold and are looking and, you know, waiting before they make their next move on expansion. it definitely impacts us. so, let's have a look at the financial markets in asia, how they traded today. you can see that japan had a brilliant session, up nearly 296, had a brilliant session, up nearly 2%, with another relatively weak yen helping the exchange in tokyo, but also the night before, fresh record highs in the us. a lot of momentum about the health of the global economy in the us, for example, the sting sentiment, and people have taken their eye off north korea for now. they are looking ahead to the us federal reserve, it's two—day meeting starts today. europe, taking a bit ofa meeting starts today. europe, taking a bit of a breather, just down by a few points. nothing too dramatic.
interesting, the losers on markets on wall street and today to a degree 01’ on wall street and today to a degree or retailers, certainly high street retailers. and suppliers to toys'r'us. hasbro fell significantly on wall street, that's an element as well. that gives you a sense of how things are going right now in europe. jane, what do you make of this story? i think it is a continuation of this transition from bricks and mortar retailers to online and the amazon affects. amazon seems to be everywhere. if retailers haven't really thought that strategy through and how they are going to respond, they are under serious pressure. toys are an interesting part of the market, because they are very big so they are quite high hard to go to they are quite high hard to go to the high street to buy and get home again. also they are the same kind of thing that you want to touch and feel and work out if you want to buy. there is a double—edged sword to this. on the one hand, you
wouldn't want to do it online, but on the other hand, you want to go to the store and play with it first. 0r maybe that's just me! the store and play with it first. 0r maybe that'sjust me! not all toys are big, obviously you like big toys! if i think of toys'r'us, i think of big lego sets, bikes, all that sort of things stop you need to go to hamleys or wherever first and play with them. i think that's right. what is interesting is that the bloke we are seeing, in the uk, further down the line and the us terms of the transition to online. consumers in the uk spend more per head online than in the us. the transition is happening much later that. give us your take on the fed, what are you expecting?” that. give us your take on the fed, what are you expecting? i don't think they are going to put rates at this time. but we are obviously getting much closer, and markets are beginning to anticipate that, the bond market in particular, it yields are rising again. people are expecting money to become more
expensive. it's getting much closer, maybe november — decembertime. thank you, jane. was that a big day out for you? going to the toy store. of course. either that or the argos catalogue. still to come: wearing your heart on your sleeve! we'll be speaking to the boss of a company which sells cufflinks for up to $33,000. i don't think any of the $33,000 ones are here. they would have their own security. you're with business live from bbc news. ryanair has published a full list of the 2,000 flights that will be cancelled over the next six weeks. the budget airline has admitted that it "messed up" the planning of pilot holidays.
400,000 passengers are likely to be affected by the error. the operator now faces a compensation bill of more than £17 million. tom burridge has more. ryanair has been anything but "satis—flying" for the huge number of people whose flights have been cancelled. the budget airline has now published a full list on its website — more than 2,000 flights cancelled over the next six weeks. ryanair have cancelled two of ourflights home now, which means we're stuck in madrid. we've had to pay out hundreds of pounds extra to book another hotel and also extra flights to get back. the communication from ryanair has been absolutely atrocious. we don't even know why it's been cancelled. we're just really desperate to get home now. ryanair claims it made mistakes when allocating leave for its pilots. it says it will refund all passengers or rebook them onto other flights, and pay compensation, particularly to those due to fly.
i don't think it's appropriate that when an organisation is offering ryanair denies it has a shortage of pilots after some left to join its rival norwegian. ryanair flies pilots after some left to join its rival norwegian. ryanairflies more people around europe than any other airline, but it has more unhappy customers now. if you want more details about what flights are affected. there is a full list published of which flights are cancel. that's on the website. ryanair finally are cancel. that's on the website. rya nair finally publishing that are cancel. that's on the website. ryanair finally publishing that full list. we heard a lot from you yesterday when we talked about this of how you were worried about flights that you had booked, but not yet taken. a number of you concerned about weddings and things like that that you were trying to get to having booked the flights. a
reminder too, if you look on the live page, there is full updates of the stories that are coming through to us at the bbc. including, as you can see the latest on the toys r us story. that's on the business live page. you're watching business live. our top story: toys r us has filed for bankruptcy protection because of growing debts at least partly caused by big changes in the way we all shop. it made it clear that most stores will stay open until it decides what happens next. now hang on to your shirt sleeves because we're going to be talking all things cufflinks. deakin & francis founded in 1786, designs and manufactures posh cufflinks. it's the uk's oldest family jeweller. seven generations have worked there.
and the workshops are still located in their original premises in birmingham's jewellery quarter but they don't come cheap. prices range from £150 or $200 up to £25,000 or $33,000. that's for limited edition gold cufflinks with gem stones. and the global cufflink market is growing, rapidly. some analysts say it will grow by 13% over the next five years because of the popularity of french—cut shirts. henry deakin, managing director of deakin & francis joins us now. we will talk about the shirt in a minute. i'vejust we will talk about the shirt in a minute. i've just spotted these. we talked about the 33,000 ones, these are close? they are about 25,000 for the set, that's the cuff links, four dress studs and a box. who wears these? these are particularly bling. i like those. i think you should. let's talk about who buys them. most
people would think there is something practical? they are up there with the royal star to royalty collection. it is amazing where products like that will sell. we sell over the world and it could be the smallest corners of the world suddenly you get an order for like that and you think who is wearing them, but you see them on the red carpet and you see them all over the place. is it you and your brother running the company? my brother and itook running the company? my brother and i took over from my dad. did you have a choice? we had a choice, but there was a lot of pressure, seventh generation, but you feel a bit of weight. how did you manage that? how did your dad sort of manage the handover as it were? was it tough for him to let go of the reigns and is he still meddling now? he retired
and he has a keen interest and wants to know what we're up to and what the latest designs. whenjames aye took over the business, we were manufacturing for other brands. we we re manufacturing for other brands. we were known as the brand behind the brand, it was luxury stores all over the world and it was the first things that james and i wanted to do was put our name out there, 231, we thought our story was as good as anyone else's, if not better and the product needed the recognition of out product needed the recognition of our name rather #2457b than just putting someone else's name on it. this is a good indication, i don't know if we can see this. that's a sterling silver pair of cuff links. they start off with a plain sheet of silver. we use a 200 tonne press to get the image on to the force on to the cuff link and then you start by hand enamelling it. this is glass enamel. it is fired up to 800 degrees and then buffed off using
very fine, we use volcanic ash. and that's the finished product. the polished one isn't on there. hold these ones up, ben. these are the more unusual cuff links and you also do those that bespoke cuff links. what's the most unusual request you have had? unusual. a pair like these. these were made for a design award originally with the vikings and the skulls and they have been incredibly popular, but bespoke is big for us. we can do your car, your boat, your horse, your dog. we were sent images, we think it was a customer's mistress, but it may have been his wife in extraordinary positions that we were asked to paint on to a pair of oval cuff links. that was one of the weirdest ones. the most expensive? we have done them for over £1 million before. for a pair of cuff links?
for a before. for a pair of cuff links? fora pairof before. for a pair of cuff links? for a pair of cuff links. that's two big diamonds. how do you walk down the street with £1 million on your sleeve? you don't send them to the dry cleaners. here is how to stay in touch with us. here is how to stay in touch with us. the business live page is where you can stay ahead with the day's breaking business news. we will keep you up—to—date with all the latest details with insight and analysis from the bbc‘s team of editors right around the world. we want to hear from you too. get involved on the bbc business live web page. 0n twitter, we are at bbc business and you can find us on facebook at bbc business news. business live on tv and online, whenever you need to know. the bbc‘s dominic 0'connell is with us. hiding my cuff links! let's talk
about this story. father of bell pottinger executive leaves rentokil? the company is in administration. bell pottinger got in trouble for work it did for south africa's gupta family. it got it because this man, who business people will know, was the executive director of bae systems. he made the introduction from bell pottinger to the gupta, his daughter worked at bell pottinger, he was paid £120,000 as an introduction fee. he has stood down from hisjob an introduction fee. he has stood down from his job at rentokil the extermination and cleaning firm. so it goes on. there is another twist which is breaking in south africa. the south african government is
looking at doing taking some action against kpmg which prepared a report for the gupta's. what a tangled web. it is going to go on and on. what else are you looking at. this is how andrew helped insurers avoid loss from harvey? people thought the hurricanes might wipe out a few insurers. it looks like it won't because they learnt from previous hurricanes. the insurance market is all about laying off and not being too exposed to one single natural occurrence. too exposed to one single natural occurrence . there too exposed to one single natural occurrence. there is maria on the way. interesting. thanks, dominic. thank you very much, dominic. that's business live. see you soon. see you very soon. business live. see you soon. see you very soon. bye—bye. good morning to you. it's a chilly
start to our tuesday morning, especially across scotland where the temperatures got down to zero celsius. we have some mist and fog around, but the sunshine will get to work and the mist and fog will lift quickly. all thanks to high pressure which is building from the south to bring a lovely and settled day, but we have low pressure nearby. it is not going to last too long. we will see the best of the sunshine across england and wales, and scotland. for northern ireland, cloud increasing through the day. you are closer to that area of low pressure, but for much of the country it is a dry day, plenty of sunshine on offer, and not a shower in sight compared with the past few days which has been rather showery. the winds are light in the sunshine. it will feel pleasant this afternoon. the temperatures up to 16 celsius and maybe 17 celsius. but as we head into northern ireland, a bit more cloud around, staying dry for daylight hours, rain arriving by the evening. scotland enjoying a fine day as well. the winds are light.
some fair—weather cloud around and plenty of sunshine to enjoy with the temperatures up to about 15 celsius. this cold weather front will bring with it rain tonight, especially across western parts, but it will start it feel milder as we start to drag in much milder airfrom the south and feeling muggy as we head towards the end of the week which is great news if you are not enjoying the chilly conditions. as we head on into tomorrow, we can look forward some sunshine, especially across the south east. further north and west, we have this rain band, strong winds accompanying the rain as well. so the rain very slow moving, staying dry for much of the day the further east you are with the temperatures ranging between 13 to about 19 celsius. thursday, slowly, but surely that weather front will push into england, gradually clearing scotla nd into england, gradually clearing scotland and northern ireland. a better day there with the temperatures ranging between 13 to 20 celsius. it will be a rather blustery day as well. as we head towards the end of the week, still
u nsettled. towards the end of the week, still unsettled. we are likely to see the best of the drier and brighter conditions across eastern counties. further west, we will see a lot more cloud and rain. we are keeping an eye on hurricane maria which is tracking its way across puerto rico with winds up to 150mph which will cause damage that to that area. so keep an eye on the forecast for that. hello, it is tuesday, it is 9am, i'm chloe tilley, welcome to the programme. another power. has battered the caribbean, with winds of up to 160 mph. hurricane maria has grown suddenly in strength and is devastating homes on the island of dominica. it is horrible over there. there's not a leaf, every tree is bent, buildings, houses, built in zoos, everything is devastated. we will have the latest, —— businesses. we'll be asking why